Demonetisation pushes 70 per cent trucks off roads, supply chain badly hit
Trucks contributed about 5 per cent to the GDP last year, but after demonetisation, 70 per cent of the transporters are forced to take their vehicles off roads.
In Short
- Truck industry is suffering in the aftermath of demonetisation.
- As per AIMTC, 70 per cent trucks are off roads after demonetisation.
- Trucks contributed about 4.8 per cent to GDP in 2015-16.
Trucks are said to be the lifeline of Indian economy as the principal mode of transport of goods across the country. Figures show that trucks industry contributed 4.8 per cent to the country's gross domestic product in 2015-16.
In terms of value, trucks' contribution to GDP amounted to Rs 544,800 crore last year. This means they contribute little over Rs 1,492 crore daily to the nation's gross domestic product.
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But, according to the All India Motor Transport Congress (AIMTC), demonetisation has pushed 70 per cent of trucks off roads. AIMTC is a representative body for 9.3 million truckers, and more than five million bus operators, tourist taxis and maxi cabs.
CASH-BASED INDUSTRY CHOKING
With 80 per cent of the transactions in cash, Rs 1,194 crore is what the industry needs daily to sustain operations -- the bulk of which is just not available today.
A transporter, Kultaran Singh Atwal, who owns seven trucks, said that he was forced to keep five of his fleet idle due to demonetisation. He needs a minimum of Rs 20,000 cash per truck per trip to keep them running but he is deprived that much of cash.
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Atwal is not an exception. There are many like him as 80 per cent of the truck business run on cash. With the government's curbs on withdrawal of money and exchange of old Rs 500 and Rs 1,000 notes, the motor transport business is suffering.
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SITUATION MAY WORSEN
The AIMTC warns that if the situation is allowed to persist not only the supplies of essential commodities like milk, fruits, vegetables and medicines will get increasingly affected but it will also cripple the lives of 200 million people directly or indirectly dependent on this industry.
"Under the Finance Act, I'm allowed Rs 35,000 per truck per trip in cash for expenses on diesel, octroi, etc," said Atwal, who is the Chairman of AIMTC.
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"How can I survive when there is an overall withdrawal limit of just Rs 50,000," Atwal asked adding, "The government must hike the withdrawal limit or allow cheque-based transactions in our sector."
Echoing similar sentiments, Bal Malkit Singh, advisor and former President of AIMTC, said, "Our operations are getting badly affected as the withdrawal limit of Rs 50,000 that we have been given is very little."
SUPPLY CHAIN BADLY HIT
What is happening in the process is the supply chain has been hit. "Movement of products is slowing down. Supplies of essential commodities like food, pulses or any export consignment are either getting slow or even coming to a halt in some places."
The fortunes of truckers are also linked to that of the trading business in India, which is facing its own set of woes. With bulk purchases in mandis almost drying up, delivery of products also becomes redundant.
TRADERS FACE 75 PER CENT DROP
"The lack of cash flow in the markets is equally affecting us traders and the transport sector as well, since both these businesses totally function on cash," said Praveen Khandelwal, Secretary General of the Confederation of All India Traders.
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"Our businesses have seen an overall drop of 75 per cent due to the demonetisation. There is a lack of money flow in the markets," Khandelwal said. "After demonetisation, around 60 per cent of freight is not in movement," added Naveen Gupta, the association's Secretary General.
Gupta said there is also a sharp drop in long-haul movement because, apart from diesel and tolls, all the other expenses, like the daily expenses of drivers, local taxes are also paid in cash.
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"The ones plying are the short-haul vehicles, which are either running on diesel bought with leftover old currency and because there is an exemption on tolls," Singh added.
(With IANS inputs)